APIs for financial inclusion – Reflections from Karandaaz Pakistan

This is a guest blog and the views expressed do not necessarily reflect those of the GSMA. A version of this blog was published on Karandaaz Pakistan’s website on Thursday, 5 October.

Financial service providers around the globe are offering different products and services on digital channels using Unstructured Supplementary Service Data (USSD), SMS based and smartphone applications. These services have allowed enhanced interconnectivity and user-friendliness, enabling greater usage. However, as organisations endeavour to provide increased instruments to their customers to enhance usage, connectivity between organisations is pivotal. This connectivity, allowing users to utilise several functions, is actualized through Application Programming Interfaces (APIs). Hence, APIs have become imperative for organisations to provide more efficient services to their respective customers. APIs help developers to innovate and create new products, improve existing services, and resultantly provide users with the adept channels to interact with their business.

An apt example of an API is the ability of the user to pay utility bills, through telecom operators in Pakistan. This in-built mechanism, whilst taking into account each organisation’s costs and revenues, has allowed customers of either organisation to pay their bills from various locations throughout the country, resulting in greater convenience for the customer, increased volumes of bill payment collection for the utility company, and revenues for the telecom operator. With the growing amount of data – especially for companies in the financial services industry, APIs can help organisations analyse this information for improved customer service. They can offer new functionalities such as transactions monitoring and reporting, integration of multiple systems of different institutions, and data encryption that streamlines operations and can contribute to the profitability of the business.

API development in Pakistan

Financial service providers in Pakistan are currently at an early stage of API based integrations. A majority of the providers have established one to one connection between financial service providers and their respective partners for the provision of different financial services such as bill collection, salary disbursement and pension payments etc. However, keeping in view the target of 50 percent financially included by 2020, as per the National Financial Inclusion Strategy 2015, more innovative services and solutions need to be developed within the financial services industry in Pakistan. API development and API based integration in the financial service industry can help the providers to open their existing systems to connect and interact with other partners’ systems to create a well-articulated ecosystem for the digital delivery of products and services.

In Pakistan there are number of use cases related to government receipts and payments which are currently unexplored by the digital service providers. There is considerable potential in digitizing Government to Person (G2P) and Person to Government (P2G) transfers that can help in expanding access to finance to the unserved and underserved segments of the population. APIs can be developed for such payments services which can be opened up for integration for all service providers in the ecosystem. Such initiatives will allow financial service providers to provide efficient, transparent, economical and convenient digital services to the end users.

To avail the chance of innovating in the financial services using APIs, the GSMA in collaboration with Karandaaz Pakistan and the two biggest branchless banking players in the country hosted a Mobile Money Hackathon in Karachi, Pakistan on Saturday, 7 and Sunday, 8 of October 2017. The objective of the hackathon was to encourage start-ups and software coders who are enthusiastic to leverage on APIs of the mobile money operators to come up with different financial products and services. It brought a unique opportunity to mobile money operators to find good software development arms of their business and was an excellent opportunity for start-ups to partner with banks as their FinTech partners.